Question 1

Which of the following is deductible in calculating the charitable contribution limit modified taxable income?

Accepted Answer

A)  Net capital loss carrybacks. 
B)  Dividends received deduction. 
C)  NOL carryovers. 
D)  Charitable contributions. 
A)  Net capital loss carrybacks. 
B)  Dividends received deduction. 
C)  NOL carryovers. 
D)  Charitable contributions.

Question 2

Atom Ventures Incorporated (AV) owns stock in the Primo and Faraday corporations. The following summarizes information relating to AV's investment in Primo and Faraday as follows:
   Assuming that AV follows the general rules for reporting its income from these investments and the value of AV's stock investments in Primo and Faraday is equal to AV's basis in these investments, what is the amount of AV's book-tax difference associated with the investment in these corporations (disregarding the dividends received deduction)? Is it favorable or unfavorable? Is it permanent or temporary?

Accepted Answer

$93,750, favorable,

Question 3

In 2020 Webtel Corporation donated $50,000 to a qualifying charity. For the year, it reported taxable income of $310,000, which included the following: the $50,000 charitable contribution (before limitation), a $100,000 dividends received deduction, and a $20,000 net operating loss carryover. What is Webtel Corporations charitable contribution deduction?

Accepted Answer

$46,000, c

Question 4

Which of the following statements is false regarding consolidated tax returns?

Accepted Answer

A)  An affiliated group can file a consolidated tax return only if it elects to do so. 
B)  To file a consolidated tax return, one corporation must own 50percent or more of the stock of another corporation. 
C)  For a group of corporations filing a consolidated tax return, an advantage is that losses of one group member may offset gains of another group member. 
D)  For a group of corporations filing a consolidated tax return, losses from certain intercompany transactions are deferred until realized through a transaction outside of the group. 
A)  An affiliated group can file a consolidated tax return only if it elects to do so. 
B)  To file a consolidated tax return, one corporation must own 50percent or more of the stock of another corporation. 
C)  For a group of corporations filing a consolidated tax return, an advantage is that losses of one group member may offset gains of another group member. 
D)  For a group of corporations filing a consolidated tax return, losses from certain intercompany transactions are deferred until realized through a transaction outside of the group.

Question 5

In January 2019, Khors Company issued nonqualified stock options to its CEO, Jenny Svaro. Because the company did not expect Miss Svaro to leave the company, the options vested at the time theywere granted with a total value of $54,500. In December of 2020, the company experienced a surge in its stock price, and Miss Svaro exercised the options. The total bargain element at the time of exercise was $69,000. For 2020, what is the book-tax difference due to the options exercised?

Accepted Answer

A)  $14,500 unfavorable. 
B)  $14,500 favorable. 
C)  $54,500 unfavorable. 
D)  $69,000 favorable. 
A)  $14,500 unfavorable. 
B)  $14,500 favorable. 
C)  $54,500 unfavorable. 
D)  $69,000 favorable.

Question 6

For corporations, which of the following regarding net capital losses is true?

Accepted Answer

A)  A corporation that experiences a net capital loss has a favorable book-tax difference in the year of the loss. 
B)  A corporation that experiences a net capital loss in Year 4 first carries the loss back to Year 3, then Year 2, and then Year 1 before carrying it forward. 
C)  Net capital loss carrybacks are deductible in determining a corporation's net operating loss. 
D)  Net capital loss carrybacks and carryovers create temporary book-tax differences if they are used before they expire. 
A)  A corporation that experiences a net capital loss has a favorable book-tax difference in the year of the loss. 
B)  A corporation that experiences a net capital loss in Year 4 first carries the loss back to Year 3, then Year 2, and then Year 1 before carrying it forward. 
C)  Net capital loss carrybacks are deductible in determining a corporation's net operating loss. 
D)  Net capital loss carrybacks and carryovers create temporary book-tax differences if they are used before they expire.

Question 7

Rapidpro Incorporated had more than $1,000,000 of taxable income two years prior to the current year. It would like to use its prior-year tax liability (which was very low but above zero) to determine its quarterly estimated payments this year. Which of the following statements is true?

Accepted Answer

A)  Rapidpro may use the prior-year tax liability to determine its first and second quarter estimated tax payments only since it is a large corporation. 
B)  To avoid penalty, the second quarter estimated payment must be large enough to cover 50 percent of its estimated annual tax liability annualized from its first quarter estimated taxable income (assume it does not rely on its current-year actual tax liability to determine its estimated tax payment). 
C)  To avoid penalty, the third quarter estimated payment must be large enough to cover 50 percent of its estimated annual tax liability annualized from its third quarter estimated taxable income (assume it does not rely on its current-year actual tax liability to determine its estimated tax payment). 
D)  None of the choices are correct.
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
105) In 2020, AutoUSA Incorporated reported $4,600,000 of book income, including $20,000 of interest income from tax-exempt bonds. AutoUSA reported $3,600,000 of regular business expenses. If it made $210,000 of estimated tax payments (prepayments) throughout the tax year, what is its tax due or tax refund when it files its return? 
A)  Rapidpro may use the prior-year tax liability to determine its first and second quarter estimated tax payments only since it is a large corporation. 
B)  To avoid penalty, the second quarter estimated payment must be large enough to cover 50 percent of its estimated annual tax liability annualized from its first quarter estimated taxable income (assume it does not rely on its current-year actual tax liability to determine its estimated tax payment). 
C)  To avoid penalty, the third quarter estimated payment must be large enough to cover 50 percent of its estimated annual tax liability annualized from its third quarter estimated taxable income (assume it does not rely on its current-year actual tax liability to determine its estimated tax payment). 
D)  None of the choices are correct.
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
105) In 2020, AutoUSA Incorporated reported $4,600,000 of book income, including $20,000 of interest income from tax-exempt bonds. AutoUSA reported $3,600,000 of regular business expenses. If it made $210,000 of estimated tax payments (prepayments) throughout the tax year, what is its tax due or tax refund when it files its return?

Question 8

Corporations and individuals are allowed to claim the qualified business income deduction.

Accepted Answer

A) True 
 B)False

Question 9

Jazz Corporation owns 50percent of the Mitchell Corporation stock. Mitchell distributed a $10,000 dividend to Jazz Corporation. Jazz Corporations taxable income before the dividend was $100,000. What is the amount of Jazz's dividends received deduction on the dividend it received from Mitchell Corporation?

Accepted Answer

A)  $0. 
B)  $5,000. 
C)  $6,500. 
D)  $10,000. 
A)  $0. 
B)  $5,000. 
C)  $6,500. 
D)  $10,000.

Question 10

Tatoo Incorporated reported a net capital loss of $14,900 in 2020. The company had a net capital gain of $6,200 in 2018 and $4,900 in 2017. In 2019, although the company suffered a net operating loss, it had net capital gains of $2,900. What is the amount of Tatoo's capital loss carryover to 2021 remaining after it applies the carryback?

Accepted Answer

A)  $900. 
B)  $3,800. 
C)  $8,700. 
D)  $14,900. 
A)  $900. 
B)  $3,800. 
C)  $8,700. 
D)  $14,900.

Question 11

Although a corporation may report a temporary book-tax difference for an item of income or deduction for a given year, over the long term the total amount of income or deduction it reports with respect to that item will be the same for both book and tax purposes.

Accepted Answer

A) True 
 B)False

Question 12

TrendSetter Incorporated paid $50,000 in premiums for life insurance coverage for its key employees for which TrendSetter Incorporated is the beneficiary. What is the nature of the book-tax difference created by this expense?

Accepted Answer

A)  Permanent; favorable. 
B)  Permanent; unfavorable. 
C)  Temporary; favorable. 
D)  Temporary; unfavorable. 
A)  Permanent; favorable. 
B)  Permanent; unfavorable. 
C)  Temporary; favorable. 
D)  Temporary; unfavorable.

Question 13

Which of the following statements regarding excess charitable contributions (contributions in excess of the modified taxable income limitation) by corporations is true?

Accepted Answer

A)  Corporations may not carry over or carry back excess charitable contributions. 
B)  Corporations can carry excess charitable contributions over to a future year or back to a prior year. 
C)  Corporations can carry excess charitable contributions over to a future year but not back to a prior year. 
D)  Corporations can carry excess charitable contributions back to a prior year but not over to a future year. 
A)  Corporations may not carry over or carry back excess charitable contributions. 
B)  Corporations can carry excess charitable contributions over to a future year or back to a prior year. 
C)  Corporations can carry excess charitable contributions over to a future year but not back to a prior year. 
D)  Corporations can carry excess charitable contributions back to a prior year but not over to a future year.

Question 14

Which of the following statements regarding net operating losses generated in 2020 is true?

Accepted Answer

A)  Corporations can carrythe NOL back two years and forward up to 20 years. 
B)  A corporation can carry over the NOL indefinitely. 
C)  A corporation can carrythe NOL back two years and forward indefinitely. 
D)  When a corporation applies a net operating loss carryover, it reports a favorable, permanent book-tax difference in the amount of the applied carryover. 
E)  None of these is a true statement. 
A)  Corporations can carrythe NOL back two years and forward up to 20 years. 
B)  A corporation can carry over the NOL indefinitely. 
C)  A corporation can carrythe NOL back two years and forward indefinitely. 
D)  When a corporation applies a net operating loss carryover, it reports a favorable, permanent book-tax difference in the amount of the applied carryover. 
E)  None of these is a true statement.

Which of the following is deductible in calculating the charitable contribution limit modified taxable income?

Which of the following statements is false regarding consolidated tax returns?

For corporations, which of the following regarding net capital losses is true?

Rapidpro Incorporated had more than $1,000,000 of taxable income two years prior to the current year. It would like to use its prior-year tax liability (which was very low but above zero) to determine its quarterly estimated payments this year. Which of the following statements is true?

Corporations and individuals are allowed to claim the qualified business income deduction.

Although a corporation may report a temporary book-tax difference for an item of income or deduction for a given year, over the long term the total amount of income or deduction it reports with respect to that item will be the same for both book and tax purposes.

TrendSetter Incorporated paid $50,000 in premiums for life insurance coverage for its key employees for which TrendSetter Incorporated is the beneficiary. What is the nature of the book-tax difference created by this expense?

Which of the following statements regarding excess charitable contributions (contributions in excess of the modified taxable income limitation) by corporations is true?

Which of the following statements regarding net operating losses generated in 2020 is true?

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Business Entities Overview

Accounting for Income Taxes

Corporate Taxation: Non-Liquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

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Exam 5: Corporate Operations

Which of the following is deductible in calculating the charitable contribution limit modified taxable income?

Which of the following statements is false regarding consolidated tax returns?

For corporations, which of the following regarding net capital losses is true?

Rapidpro Incorporated had more than $1,000,000 of taxable income two years prior to the current year. It would like to use its prior-year tax liability (which was very low but above zero) to determine its quarterly estimated payments this year. Which of the following statements is true?

Corporations and individuals are allowed to claim the qualified business income deduction.

Although a corporation may report a temporary book-tax difference for an item of income or deduction for a given year, over the long term the total amount of income or deduction it reports with respect to that item will be the same for both book and tax purposes.

TrendSetter Incorporated paid $50,000 in premiums for life insurance coverage for its key employees for which TrendSetter Incorporated is the beneficiary. What is the nature of the book-tax difference created by this expense?

Which of the following statements regarding excess charitable contributions (contributions in excess of the modified taxable income limitation) by corporations is true?

Which of the following statements regarding net operating losses generated in 2020 is true?

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Business Entities Overview

Accounting for Income Taxes

Corporate Taxation: Non-Liquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters